Economic Overview - The overall economy shows strong resilience, with supply better than demand, characterized by weak domestic demand and stable exports. The manufacturing PMI for May 2025 improved to 49.5, indicating a slight recovery but still below the neutral level of 50 [7][12] - The manufacturing production index rose above 50 to 50.7, reflecting improved business conditions, while the strategic emerging industries PMI increased to 51, indicating growth in new orders and exports [12][15] Liquidity Conditions - The liquidity environment is characterized by external tightening and internal easing. The expectation for a Federal Reserve rate cut has been delayed, with the first cut potentially pushed to September 2025. Domestic liquidity is expected to remain stable and slightly loose following recent rate cuts [7][28][35] Policy Focus - The policy direction is concentrated on foreign trade, employment, and consumption. Recent measures include accelerating national bond issuance and targeted support for small and micro enterprises, technology industries, and employment stabilization [49][51] - Local governments are implementing consumption-boosting policies, including subsidies for various consumer goods and services, to stimulate domestic demand [52][56] Industry Allocation - The report suggests focusing on the technology, military, and electronics sectors for June 2025. The technology sector is expected to benefit from favorable conditions and catalysts, including significant financial policy announcements and advancements in autonomous driving technology [58] - Specific recommendations include companies in the computer sector such as Haiguang Information and Kingsoft, military firms like Aero Engine Corporation of China, and electronics companies such as Longi Green Energy [65][59][60][61] Computer Sector Insights - The computer sector is supported by strong demand for computing power, as evidenced by Nvidia's revenue growth of 69% year-on-year, reaching $44.1 billion in Q1 FY26, exceeding market expectations [59] - The supply chain for domestic computing is expected to benefit from U.S. export restrictions on certain chip series, enhancing the competitive position of local firms [59] Military Sector Insights - The military sector is anticipated to see accelerated orders as 2025 marks the conclusion of the 14th Five-Year Plan, with a focus on high-quality development in military construction [60] - The international military trade space is expected to expand, particularly following successful technology showcases at international defense exhibitions [60] Electronics Sector Insights - The electronics sector is poised for growth due to ongoing U.S. technology restrictions, which create opportunities for domestic semiconductor replacements [62] - Developments in autonomous vehicle technology and upcoming major tech events, such as Apple's Worldwide Developers Conference, are expected to provide further momentum for the electronics industry [62]